Ikea self-imposes ambitious renewable energy target: 100% by 2020

Ikea: 100% renewable energy by 2020

by James Martin II on October 26, 2012

Swedish furniture giant Ikea plans to set the standard for multinational corporations by sourcing all of the power that it uses in its operations from renewable energy  by the year 2020, according to its “People & Planet Positive” sustainability strategy. In recognising that making this swift and decisive move to clean energy will not only improve the company’s brand image and have a real positive environmental impact, but also improve the company’s resilience to price rises from conventional fossil fuel-derived generation, Ikea is taking a proactive approach to the future of its business.

The People & Planet Positive strategy, if all goes to plan, will see the company sourcing 70% of its energy needs from renewables such as wind and solar by the year 2015 and 100% by 2020. The announcement follows Ikea’s announcement earlier this year that it will begin offering solar panels at its stores across the UK, and adds to its green reputation amongst its customers. Other key goals in the company’s strategy include new standards for sourcing materials from sustainable sources and recycling 90% of the waste from its stores.

Lengthy and thorough consideration was clearly put into both the hard financial benefits of the target that will come as a bonus to the ‘soft’ benefits to its brand name. €1.5 billion is to be invested in the growth of its clean energy generation portfolio–an increase of nearly €1 billion from the amount it had originally budgeted for renewables in the same timeframe. The company already has well over 43 megawatts (MW) of solar panel capacity installed on roofs across its offices and stores globally, and has made substantial investments in other clean technologies such as energy efficiency and wind power.

One of the overriding drivers in Ikea’s decision is the cost of power. Electricity prices are set to rise EU-wide (including the UK), with power from fossil fuel power plants seen as being particularly vulnerable to price volatility. Renewable energy sources such as wind and solar, on the other hand, are some of the only generation sources whose costs are coming down. Solar PV is even projected to reach price parity with coal and nuclear by 2020.

Steve Howard, sustainability officer at the Ikea Group, explained the reasoning behind the company’s investment. “We know we’re going to be using energy in 20 years’ time. If we can own our own renewable energy plants … it gives us complete price certainty. … All our solar [installations] pay back in 10 years or less and will last for 20 years. It’s a really good use for the money we’ve saved for a rainy day.”

In addition to generating more power from solar and other renewables (and possibly even becoming a net energy exporter), Ikea also aims to drastically improve its energy efficiency, conducting all of its usual operations using only 80% of the energy by 2020. This will save the company significant sums on electricity bills, to the tune of approximately €15 million annually. Commercial energy efficiency is becoming increasingly important to companies looking to cut costs and increase margins as the cost of power rises.

Ikea’s bold initiative is certain to galvanise other large companies to follow suit or be left in the dust.

Images via IKEA

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